2017Issue5_Alabama_v6

Inefficient Ordering Practices “On one of my recent perishable department audits, we determined that a produce manager was consistently ordering 60% more product than required to accommodate anticipated sales. As we installed improved discipline, inventory-on- hand was reduced by 35%, and sales increased.” Improper Space Allocation “When I started working in stores in 1968, my first perishable lessons involved ‘pile it high and watch it fly!’ Space allocation meant little. But today, we know that maximizing sales and freshness control require a more disciplined operational strategy. Today, it’s too easy to project daily sales requirements accurately and display to accommodate those sales. Strategic space allocation is a must!”

Smart Technology Reveals Perishable Profit Loss According to the 2014 National Supermarket Shrink Survey, perishables account for more 64 percent of total store shrink. Companies need to ensure that store managers and loss prevention specialists are trained in the best practices of perishable shrink control. Proper use of expert BI technology will reveal profit loss patterns and trends. Here are three examples of perishable shrink:

Example #1 Meat Discount Coupons Cause Profit Erosion

At one major grocery chain, ProfitTrax revealed that meat discount coupons were contributing to unaccounted for gross margin erosion of up to 1.5% of sales and were the cause of prices being increased to cover the missing gross margin. Misuse of discount stickers also masks over production of fresh meat items. (While not a factor in these cases, discount coupons are also known to be a contributing factor in theft/ discounting and theft at the POS.) CASE VALUE: Loss of 1.4% of Meat Gross Margin

Example #2 Inefficient Known Loss Tracking

Most companies use a Known Loss tracking programs. Research reveals that Known Loss control is the #1 most inconsistently executed program in most perishable departments with only 65% of actual Known Loss being recorded. When properly tracked and causal conditions mitigated by consistent best practice implementation, true Known Loss can often be reduced by 18-22% in a matter of just a few weeks, resulting in a significant profit improvement and potentially leading to competitive pricing advantage. CASE VALUE: Profit Improvement of .88%

Example #3 Smart Ordering and Cooler Management

For years we have been talking about code dating coolers for proper FIFO rotation. This is one reason but it misses the real value proposition. Consistent implementation of Cooler Management Best Practices leads to a systemic profit optimization culture and training environment. CASE VALUE: 22% Shrink Loss Reduction

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ALABAMA GROCER |